HUGHES (AP) — A school district in eastern Arkansas is exploring options for consolidation after the state said it doesn't have enough students to continue as an independent public school system.

The 2014-15 academic year will be the Hughes School District's last as an independent entity, the Times-Herald reported. The school year starts Monday.

The Arkansas Department of Education said the district will have to consolidate or annex into another district next year, because it's had fewer than 350 students for two years in a row.

District officials are getting ready for this school year while reaching out to other districts to discuss their options, superintendent Sheryl Owens said.

"Right now things are business as usual, but we are definitely aware of this cloud hanging over our district," Owens said. "We have parents who think that we're not going to be open this year, and that's just not the case. We're making all of the normal preparations for the start of school, but at the same time, I am exploring our options for the future."

Owens said the biggest challenge is that the district is not really near others. She hopes to keep a campus in Hughes.

"We're the truest definition of a rural school district in the sense that we aren't close to anywhere," Owens said. "I'm working to make a plan, and I have my preferences. Either way, I'm going to have to make a presentation to the state board in October outlining our plans for the future."

The district has a fiscal distress standing, but Owens said that designation was due to coding errors caused by a bookkeeper and not financial issues.